Allianz Future Optimism Index: Australians' optimism about the economy remains at its lowest level since mid-2011

Allianz Australia Managing Director, Terry Towell, said "for most Australians, regardless of gender, age, or State of residence, optimism about the future of the economy fell substantially over the course of 2011. And, as a whole, Australians have entered 2012 much in the same vein, with some groups even less optimistic than the low points reached last year."

While Labor voters have been consistently more optimistic about the future of the economy than their Coalition counterparts, their optimism about the economy has fallen significantly in the latest survey.

Optimism about the economy has collapsed in Victoria, and is now in line with NSW, Queensland and SA, which are also hovering around their survey lows. However, optimism has returned to near-survey high in WA.

Optimism about the economy among Men remains at the lowest level it first reached in mid-2011.

Optimism about the economy among middle-aged Australians has fallen significantly since November 2011.

"Australians' optimism about the future of the economy hit a 2011 low in May, with the Optimism Index falling from 14 to 9, reaching a level less than half the Index level of 20 achieved when the survey commenced in November 2010. This may have reflected the aftermath of the Summer of natural disasters, exacerbated by global economic uncertainties."

"After bumping around at relatively low levels over the second half of 2011, Australians' optimism about the economy has started 2012 on a low, with the Optimism Index falling back to only 8."

"When looking into the results in more detail, there have been some significant changes in sentiment among different groups in the community and those living in particular States. For instance, since mid-2011, optimism about the economy has fallen significantly among Labor voters, men, and those living in NSW, Victoria and South Australia. The fall in optimism about the economy is most apparent in Victoria, where the Index has collapsed from 18 in June 2011, to only 3 in January 2012."

"It would appear that the ongoing uncertainty about the global economy being caused by the European sovereign debt crisis and the drawn-out recovery in the US economy is contributing to a continuing lack of optimism among Australians about the future of the local economy."

Background

Allianz and Newspoll have joined forces to conduct a bi-monthly survey which measures Australians' level of optimism about the future of the economy, environment and society, as well as their overall happiness. Optimism indexes in each of these four areas are created to measure changes in optimism over time and differences in optimism among those in different demographic groups.

Respondents' score their level of optimism on a scale from zero to ten. Those that score between zero and three are regarded as pessimists and those that score between eight and ten as optimists. Those that score between four and seven are regarded as neutral.

The net result of deducting the proportion of pessimists from the proportion of optimists gives the relevant Optimism Index. A positive Optimism Index results if the number of optimists exceeds the number of pessimists, and the reverse results in a negative Optimism Index.

Survey results

All Australians
The Optimism Index for the Future of the Economy for all Australians fell from 11 in November 2011 to 8 in January 2012. This compares to an Index of 13 in the January
2011 survey a year ago, and is significantly below an Index score of 20, recorded in November 2010 when the survey commenced - see Table 1.
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Optimism by Voting Intention
Optimism about the Future of the Economy has collapsed among non-Coalition voters since mid-2011. The Optimism Index for ALP voters has tumbled from 30 to 18 over this period, and the Index for Other voters (around 50% of which vote for The Greens) has dropped significantly from 18 to 2.

Interestingly, over the same period, optimism among Coalition voters has risen from below zero to 5, but still remains substantially below that of ALP voters - see Table 2.
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Optimism by State
The level of optimism has fallen among those living in NSW and Victoria since the latter part of 2011. The Optimism Index for Victoria has fallen significantly, from 11 last November, to a new survey low of 3 in January 2012, and has plummeted compared to its high of 23 recorded in March 2011. The Optimism Index of 7 for NSW has fallen back into line with the level of 6 recorded in May and September 2011, and is well down on the high of 23 recorded at the end of 2010.

After bouncing back from a horrible start to 2011, a result of the floods and Cyclone Yasi, the Optimism Index for Queensland has fallen back once again, from 10 last
November to 4 in January this year.

The Optimism Index for Western Australians, who are generally more optimistic about the economy than other Australians, has moved in the opposite direction to the Eastern States over the last six months, increasing from a low of 10 in June 2011 to 27 in the most recent survey.
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Optimism by Gender
As indicated in Table 4 below, women are consistently less optimistic about the economy than men. The more recent trend for both, however, is in the same direction. Men's optimism about the future of the economy has nearly halved since mid-2011, from 21 last June to 12 in November 2011, where it has remained in January 2012.

And while, conversely, the Optimism Index for women hit a low point in mid-2011, after subsequently rising to a relatively high level of 9 by last November, it has fallen back to near low levels in January.
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Optimism by Age
Optimism about the future of the economy falls into two main groups when it comes to age, with younger (18-34 year-olds) and older (65+) Australians generally more likely to be optimistic when compared to the middle-aged groups (35-64). Optimism about the future of the economy among middle-aged Australians has fallen again in the most recent survey, notably among 50-64 year olds - see Table 5.
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About the Allianz Future Optimism Index

The Newspoll survey on which the Allianz Future Optimism Indexes are based, asks around 1200 Australians to rate each of the following statements on a scale of 0-10, where 10 is extremely optimistic and 0 is not optimistic at all:

1. The future of the economy;
2. The future of the environment in relation to pollution and climate change;
3. The future of our society in relation to crime levels and community values;
4. The overall future prospects and happiness for you and your family.

The responses to these questions are multiplied by ten to obtain an equivalent score out of 100 and averaged to create an index score out of 100 for each question. The four sub-indices are then averaged to obtain the overall Allianz Future Optimism Index.

In the analysis of the survey, respondents that give a score of 8 or more out of 10 are regarded as being optimistic and those with a score of 3 or less out of 10 are regarded as being pessimistic. The remainder, that is, those scoring between 4 and 7 out of 10, are referred to as being more neutral. Results based on these definitions are given as a proportion of the demographic group in question (eg 30% of Australians are optimistic/pessimistic about the economy).

More detailed demographic and geographic results for the Allianz Future Optimism Index are available on request.

The latest survey was conducted by telephone among a national sample of 1205 adults aged 18+. Fieldwork was conducted over the period of the 16-18 September 2011 and results were post-weighted using the latest Australian Bureau of Statistics population estimates.